Elon Musk loses trying to free himself from oversight by SEC Tweet

Jae C Hong / AP / Shutterstock / Jae C Hong / AP / Shutterstock

Being the new owner of Twitter doesn’t protect Elon Musk from complying with SEC rules – he’s stuck with Twitter. On April 27, a federal judge denied Musk’s request to overturn the subpoena and end the consent decree on his 2018 tweets.

Poll: What do you think about Elon Musk buying Twitter?
Research: Twitter posts $1.2 billion profit in the first quarter days after Elon Musk’s acquisition

Musk was not forced to enter into a decree of consent; Instead, “For [his] special strategic purposes, [Musk]U.S. District Judge Lewis Lehman wrote in his judgment, with the advice and assistance of counsel, to enter into these agreements voluntarily, in order to secure the benefits from them, including their termination.

Bonus offer: Earn up to $1,500 by opening a Citi Priority Account with the required activities.

In March, the Securities and Exchange Commission said Musk would continue to scrutinize his tweets. That same month, Musk asked a federal court to overturn a 2018 ruling requiring them to obtain pre-approval for some of his tweets. This stemmed from a row between Musk and regulators over a tweet that had negative consequences for some investors, as GOBankingRates previously reported.

At the time, Musk’s lawyer asked the court to terminate or amend the settlement, which was revised in 2019, claiming that compliance with its rules “has become impossible under the skewed perception of its power.”

In 2018, Musk tweeted that he planned to take Tesla private, but on February 1 asserted in court that his tweet was “completely honest” and that investors who claim the letter was fraudulent are wrong, as GOBankingRates previously reported.

“I am considering taking a private Tesla at $420. Funding secured,” Musk tweeted in August of 2018. “Shareholders can either sell at $420 or own stock and then go private.”

Following the 2018 tweets, the Securities and Exchange Commission sued Musk, claiming that Musk knew or was reckless in not knowing that each of these statements were false and/or misleading because he had no proper basis in fact for his assertions. When he made the remarks, Musk knew he had never discussed a private $420-per-share deal with any potential funding source, had done nothing to investigate whether it was possible for all existing investors to stay with Tesla as a private company via a “special purpose fund,” and would not confirm Tesla investors backing a potential private deal,” according to a SEC 2018 filing.

Bonus offer: Find a checking account that fits your lifestyle. $100 bonus offer for new checking account customers.

On November 16, 2021, the Securities and Exchange Commission issued another subpoena “seeking information about our governance processes on compliance with the SEC settlement, as amended,” according to the SEC filing.

The judge wrote on April 27 that “Musque may wish it to be otherwise, but remains subject to the same enforcement authority—and has the same means to challenge the exercise of that authority—as any other citizen. Indeed, to conclude otherwise would be a consideration that A serial violator of securities laws or a repeat offender will be more protected against SEC enforcement than someone who has never been charged with violating a securities law.”

According to the ruling, Musk argued that the consent decree needed to end this case because it intruded on his First Amendment right to freedom from prior restrictions because it was “misused to conduct an unlimited investigation of his speech” and was “extracted from [him] through the exercise of economic coercion.”

In response to the decision, Musk’s lawyer, Alex Spiro, said, “Stay tuned,” Politico reported.

Poll: What do you think about Elon Musk buying Twitter?
Find Out: 20 Genius Things Mark Cuban Says You Do With Your Money

Bonus offer: Bank of America Bonus offer of $100 for new accounts online. See page for details.

According to Politco, “Nothing will ever change the truth, which is that Elon Musk was considering taking Tesla private and could be.” “All that remains after half a decade is the remaining litigation that will continue to make that fact clearer and clearer.”

More from GOBankingRates

About the author

Yael Biswati Kennedy is a full-time financial journalist with numerous publications, including Dow Jones, Financial Times Group, Bloomberg and Business Insider. She has also worked as Vice President/Senior Content Writer at major New York City-based financial firms, including New York Life and MSCI. Yael She now works independently and most recently co-authored the book “Blockchain for Medical Research: Accelerating Trust in Healthcare” with Dr. Sean Manion. (CRC Press, April 2020) She holds two MAs, one in Journalism from New York University and one in Russian Studies from Toulouse Jean Jaures University, France.

Leave a Comment